AOS1 Q Flashcards
Advantages of sole trader (6)
simple and inexpensive to set up Owner has complete control No disputes with partners Less costly to operate Owner right to keep profit Less government regulation
Disadvantage of sole trader
unlimited liability End of business when owner dies Can't operate if sick Need carry losses Difficult for expansion
What are the two types of partnerships. Elaborate
general partnership (unlimited liability) Limited partnerships (silent partners, financial support)
Advantages of partnership
simple and inexpensive to setup Workload can be shared between partners Risk/debt shared amongst partners May be easier to take time off Easier to raise capital
Disadvantages of partnership
unlimited liability
Potential disagreement
Liability for debt incurred by other partners
Difficult to find suitable partner
What is a sole trader business (3)
one person who owns and runs the business
The individual and the business have the same entity
Therefore unlimited liability (responsible to pay off debt
What is a partnership
A business owned by a minimum of 2 or a maximum of 20 people
Not separate legal entity from the partners.
What is a public listed company (3)
company where shares of the business are for sale in an open market (ASX)
Limited liability
Have limited or “Ltd” behind name
Advantage of public limited company (2)
limited liability
Easy to raise capital (money) by selling more shares
Disadvantage of public limited company (4)
highly complex and time consuming to establish
High cost to establish
More accountability and compliance
Possible loss of control
What is a private listed company eg.
An incorporated business with a minimum of two and a maximum of 50 private shareholders, and whose shares are offered only to those people whom the business wishes to have as part owners
Visy
What is social enterprise (3)
a business that produces goods and services for the market, but operates with the primary objective of fulfilling a social need eg salvos
The business may make a profit however, the business will continue to work towards goals
Can take form of a charity, a cooperative of privately owned business.
Advantages of social enterprise (2)
Can open up new markets
Meeting a social need can have a positive effect on profit and market share
Disadvantage of social enterprise (2)
Difficult to obtain capital to start the business
Significant operating costs
Can be difficult to focus on both social and financial objectives
What is a government business enterprise (2)
A type of business that is government owned and operated
Like companies, they participate in commercial activities with the goal of making a profit
Advantages of government enterprise (3)
able to carry out government policies delivering community services in areas where private sector businesses might hesitate to invest
Can operate with some independence from government
Provision of healthy competition to businesses in the private sector - can lead to low prices in the market
Types of objectives
To make a profit To increase market share To fulfil a social need To fulfil a market need To meet shareholders expectations
What is an objective (2)
desired goal, outcome or specific result that an organisation intends to achieve
Gives an organisation direction, providing a path to follow
What is a vision statement
States what the business aspires to become
What is a mission statement
expresses why the business exists, its purpose and how it will operate
What does it mean to fulfil the market need (3)
opening a gap in the market
Feeding the target market
Identifying what the target market requires to allow you to meet their needs and build a market for your goods and services
Types of performance indicators (10)
net profit Number of sales Rate of productivity growth Customer satisfaction Staff satisfaction Staff turnover Level of wastage Number of complaints Number of workplace accidents Market share
What is a stakeholder
groups and individuals who interact with the business and have a vested interest in its activities
Difference between internal and external stakeholders
Internal stakeholders are those are part of the business while external are those who interact with the business but are not part of it
Example of internal stakeholders (5)
owners shareholders directors management employees
Example of external stakeholders 4()
Government Competitors Interest groups (unions, consumer goups, specific issue groups) Customers suppliers Members of the community
What is corporate social responsibility
The obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment
The areas of responsibility
Operations Finance Sales and marketing Human recourses technology support
What is operations responsible for
This area is responsible for the production of a business’s products. It oversees the transformation of inputs into the finished product
What is the area of finance responsible for
This area is responsible for managing the financial aspect of the business. This can include developing financial policies, raising finance, budgeting, accounting, reporting and cash control
What is the area of human recourses responsible for
Responsible for co-ordinating all the activities involved from acquiring to terminating employees of the business. They also manage the relationship between the employer and employees
What is sales and marketing responsabile for
Responsible for the marketing mix known as the 7 p’s. (product, promotion, price, place, people, physical evidence and process
What is technology support responsible for
This area is responsible for installing and maintaining technology as well as providing assistance to the users of technology in the business
7 p’s of sales and marketing
product, promotion, price, place, people, physical evidence process
List of management styles
Autocratic Persuasive Consultative Participative Laissez-faire
Autocratic management style (4)
manager tells staff wha decisions have been made
One way communication
Controlling
Frequent checking
Advantages of autocratic style, (4)
Directions and procedures are clearly defined
Employees roles are set out plainly, managers can assess performance
Control is centred at top management
Time efficient
Disadvantages of autocratic management style (3)
Less ideas circulating the business
Employees job satisfaction decreases as no responsibilities are given
Conflicts between employees trying to satisfy managers
The persuasive management style (3)
Like autocratic, manager tells staff, but also tries to convince them that it’s the right decision
One way communication
Adding a why and because
Advantages of the persuasive management style (4)
Managers can gain some trust in ideas
Employees feel that their feelings are being considered
Instructions remain clear
Some acceptance of negative situations
Disadvantage of the persuasive management style (3)
Attitudes and trust can remain negative
Discussion is still poor
Employees remain frustrated as they are denied dull participation
Consultative management style ()3
seeks employee ideas and input before making decisions
Two way communication
Manager still makes final decision
Advantage of consultative management style ()3
Greater variety of ideas
Employees feel that they have ownership in the way the business is run, increase job satisfaction
Task completed more efficiently due to discussion
Disadvantages of the consultative management style (3)
Slow performance due to time taken to discuss
Some issues are not suitable for wide spread consultation
When number of ideas are shared some are overlooked decreases happiness of certain employees
Participative management style (3)
Manager unites with staff to make the decision together
Managers recognise strengths and abilities of staff and include them in decision making
Two way communication
Advantages of participative management style (3)
positive relationships between employees and employer.
employees more likely to accept management decisions.
increase job satisfaction as employees feel that they have played active role in allocating tasks and implementing objectives
Disadvantages of the participative management style (4)
Long process of decision making
Lowered control of managers
Internal conflict may arise with vast majority of ideas
Not all employees want to contribute
Laissez faire management style (3)
employees assume total responsibility for, and control of, workplace operations
Employees feel a sense of ownership
Open two way communication
Advantages of the laissez faire management style (3)
employees feel sense of ownership, which can promote outstanding results
dynamic working environment due to encouragement of creativity
open communication
Disadvantages of the laissez faire management style (3)
complete loss of control by managers which can lead to misuse of resources
conflicts between employees not cooperating
focus on meeting business objectives can be easily eroded
What’s the relationship between management styles and skills (2)
the type of management style that a manager users will tend to effect which skills they use stronger than others
also the managers stronger skills will tend to have a stronger influence over what style they should chose to use
Management skill communicating (2)
Involves the ability to transfer information from a sender to receiver, and listen to feedback.
Can be verbal and non-verbal
Management skill delegation(2)
Refers to the ability to transfer authority from a manager to an employee to carry out specific activities.
It can lead to fresh ideas and improvements in employee motivation
Management skill planning
The ability to define business objectives and decide on the methods or strategies to achieve them
What are the levels of planning (3)
Strategic- long term planning, usually over 2-5 years
Tactical-flexible, adaptable, medium term planning usualy over 1-2 years and assists in the implementing of the strategic plan
Operational-provides specific details about the way in which the business will operate in the short term
What is the planning process (5)
Define the objective Analyse the environment (SWOT analysis) Develop alternative strategies Implement an alternative Monitor and seek feedback on the implemented strategy
The management skill of leading (3)
The ability to influence or motivate people to work towards the achievement of business objectives
The management skills of decision making
The ability to identify the options available and then chose a specific course of action from the alternatives
The decision making steps (5)
Develop objectives and criteria Outline the facts Identify alternative solutions Analyse the alternatives Chose one alternative and implement
What are the interpersonal skills (3)
Ability to deal or liaise with people and build positive relationships with staff
How to best get along with staff to achieve objectives
Genuine concern for interests
What is corporate culture
Refers to the values, ideas, expectations and beliefs shared by members of the business
What is official corporate culture (3
Policies, objectives or slogans of the business
What is the real corporate culture (2) eg
Informal rules (unwritten) that guide how people behave in the business. E.G. staff dress, language staff use, how staff treat each other and customers
What are the the elements of corporate culture (4(
Values and practices
Symbols
Rituals, rites and celebrations
Heroes (successful employees)
Parts of developing corporate culture (2)
It is important to have positive corporate culture as it makes the workplace more positive which can lead to more success
Management is able to build on this by extending the four essential elements
Types of leaders And what they do
Transactions leaders (provide staff with rewards) Transformational (inspires staff)
